LONDON — The global cryptocurrency market underwent a correction of around 11% over the weekend, after a riotous start to the year.
Things could get worse, with China on Monday announcing a ban “initial coin offerings”, the digital coin issuing craze that has helped fuel the market’s rapid rise in 2017.
The total value of the 866 digital currencies tracked by CoinMarketCap.com declined from close to $US180 billion on Saturday to $US160 billion on Monday morning.
Analysts said the dip is just a correction after a wild start to the year for the crypto market — the total value of all assets in the space grew by more than 80% in August alone.
Charles Hayter, the CEO and founder of CryptoCompare, told Business Insider: “Bitcoin touched $US5,000 on some exchanges and with the psychological level met the market panicked with traders taking profits off the table. The price pulled back to $US4400 on the on the CryptoCompare BTC USD index.
“Markets moving up so quickly with such uncertainty are naturally going to be subject to huge bouts of volatility – the stock markets usual half per cent gyration is bitcoins 5% normality.”
Mati Greenspan, a senior analyst with trading platform eToro, told Business Insider: “The price has been surging since July 16th. This minor technical correction has taken us back to the valuations from last week.”
The total cryptocurrency market is still well up on the year, as this chart from CoinMarketCap.com shows:
However, the markets could be in more a more fundamental down-swing. China’s central bank, the People’s Bank of China, announced an extension of its crackdown on ICOs — initial coin offerings — on Monday morning.
ICOs, where startups issue their own digital coins to raise money, have helped fuel the surge in the cryptocurrency market so far this year, with over $US1.5 billion raised using ICOs. These coin offerings mostly piggy-back off the Ethereum cryptocurrency, which has helped propel its valuation higher.
eToro’s Greenspan told Business Insider: “I don’t anticipate that it will affect the price of Bitcoin all that much — the story is completely different. It could have an impact on the price of Ethereum, it depend on how far they go with it. China’s a major part of the ICO market and with the US also strengthening their rules, it could have an effect.”
Ethereum is down over 5% against the dollar Monday morning in London:
Bitcoin is down over 3% at the same time:
Get the latest Bitcoin price here.